The Swedish economy is surging ahead.
As the third largest country in Western Europe, Sweden is perceived as a liberal and modern nation and its large middle class enjoys a generous welfare system and a high standard of living. "Currently the economy is experiencing high growth and stability with record export figures expected this year. About 50 per cent of Sweden's GDP is from exports, and the steel industry along with the mining companies are expanding," says Daniel Mokari, Associate — Middle East and Eastern Africa, Sweden Trade Council.
According to Mokari, Sweden is making efforts to decrease its dependence on oil and gas. "A number of projects are under way to channel wind and water energy," he says.
According to figures from the Ministry of Finance, Sweden's gross domestic product (GDP) is expected to grow by 3.7 per cent in 2007 and 3.3 per cent in 2008. Total unemployment, measured as the annual average, is estimated to decline from 8.4 per cent in 2006 to 6.7 per cent in 2007 and 6.2 per cent in 2008. General government net lending is projected at 2.3 per cent of GDP in 2007 and 2.2 per cent in 2008.
Sweden's GDP growth is expected to taper off in 2007 and 2008 but remain high. Exports are set to grow at a brisk pace, though somewhat more slowly in line with less vigorous global growth and a stronger Swedish crown.
While growth in investment is likely to decelerate, high capacity utilisation and propitious financial prospects for businesses indicate that the level of investment will remain buoyant. Due to rapidly growing disposable income, rising employment and a solid initial wealth position, household consumption is projected to increase substantially, according to the Ministry of Finance.
Revenue growth
Spurred primarily by solid revenue growth, public consumption is set to rise most rapidly in the local government sector. Demand for labour is strong, the number of newly reported vacancies is high and businesses are planning to hire more people. As a result, employment is expected to continue rising in 2007 and 2008. Inflation is low and should slow down this year as the Swedish krona strengthens and energy prices decline. Owing to strong demand for labour, resource utilisation in the labour market is expected to be tight in 2008. The likely result will be a gradual acceleration of wage growth and inflation in 2008 and 2009. Faced by rising wages and inflation, the Riksbank (the central bank) is expected to raise its repo rate to a maximum of 4.75 per cent during 2009. In sum, the effect should be a slowdown in employment and GDP growth in 2009 and 2010 to below the potential growth rate.
Tourism
Sweden is attracting the interest of tourists from around the world and the tourism industry generates 2.79 per cent of GNP.
"Sweden is not a destination for mass tourism. For people focused on nature, culture and design, Sweden is an interesting choice," says Bitte Olsson, Information Officer, VisitSweden.
The responsibility for marketing of Sweden as a destination lies with VisitSweden, which is owned 50 per cent by the Swedish state through the Ministry of Enterprise, Energy and Communications and 50 per cent by the Swedish tourism industry. "The marketing is focused on a chosen target group — the global traveller — which consists of people who are ecologically and socially committed and are looking for unusual, learning experiences in genuine travel destinations. The target group often books travel via the internet and has a lot of experienced travellers who place high demands on availability and activities," says Olsson.
The official statistics for the tourism industry in Sweden are expressed in bed nights. A bed night is an international term for one person staying one night in a commercial accommodation.
In 2006, a growth of nine per cent was witnessed in bed nights, while in Europe it increased by four per cent and globally by 4.5 per cent.
Total number of bed nights in Sweden for 2006 was 12,1 million. The number has increased 91 per cent since 1991. "Foreign bed nights (foreign bed nights in Sweden are all those registered of other citizenships than Swedish) has a 24 per cent share of the total number of bed nights in Sweden. These numbers, though, are for both leisure and business travel since the official statistics do not register business and leisure travel separately," explains Olsson.
Environmental issues
Sweden has for decades focused on environmental issues and several Swedish companies have developed advanced technologies in this sector. "Envac invented the automatic refuse collection technology during the 1960s and operated mainly in Europe until the 1990s, when Envac decided to launch the technology in Asia and the Middle East.
Since environmental issues have become very important in most developed countries, Envac is growing rapidly and is today the fastest growing environmental company in Sweden," says Christian Ostervall, Project Manager, ENVAC.
Retail sector
H&M's popularity is based on its business idea which aims to provide customers with fashion clothing combined with high quality and reasonable prices. In the past five years, H&M's sales, including VAT, have increased by 72 per cent and profit after tax by 183 per cent. Profit after financial items amounted to 15.8 billion crowns in 2006.
"The Swedish stock market was up by more than 7.4 per cent in 2006, and H&M was a significant player behind that growth. H&M is the second largest company (market cap) on the Swedish stock exchange and the H&M share price surged 28 per cent during 2006. Currently, the total value of H&M is 360 billion crowns," says Nils Vinge, Head of Investor Relations, H&M Hennes & Mauritz.
Telecom industry
According to a report published by the National Post and Telecom Agency, Sweden's retail market for electronic communications had a turnover of 24.9 billion crowns during the first half of 2006, which means that the retail market increased by more than 1 per cent when compared with the first half-year of 2005.
"IT and telecom are flourishing industries in Sweden, and apart from industrial products, forms one of the biggest exports from Sweden," says Mokari.
Automobiles
Volvo, another Swedish icon, began operations in Göteborg. "Today, Volvo has its headquarters, research and development, purchasing departments, administration and one of its major production facilities in Göteborg, Torslanda, whereas the other major production facility is located in Ghent, Belgium. As part of Ford Motor Company, Volvo's financial figures are not public, but Volvo is one of the main contributors to Sweden's export activity," says Greg Maruszewski, Regional Managing Director.
The automotive sector of Sweden continues to grow. "In 2006, 282,766 new cars were registered, compared to 274,301 in 2005. This is an increase of 3.1 per cent. The number of cars in Sweden is more than anywhere else in Europe, with a very high age average. The number of diesel cars has traditionally been low (3-5 per cent). However, in the past few years the registrations of diesel cars has increased significantly and is today more that one-third of all registrations," says Maruszewski.
Currently, about 15 per cent of all newly registered cars are environmentally friendly, whereas the vast majority are Flexifuel cars, which run on the fuel E85.
"E85 is a blend of 85 per cent ethanol and 15 per cent petrol. The Flexifuel cars are subjected to lower annual road taxation in Sweden, and as company cars, owners are offered a 20 per cent discount on the company car tax," says Maruszewski.
